Shelley Hughes – Alaska Politics and Elections

Op-Ed “Turn Up the Volume”-part 1

Editor — Thu, 05 Mar 2020 08:58:45 +0000

By Steven Cinelli and Senator Shelley Hughes

March 5, 2020

We find ourselves locked in yet another year of the fiscal crisis. While solving the budget gap merits the most serious discourse, it has to date been characterized by prejudice and focus on just two aspects by most legislators: oil taxes and PFD reductions. Scrambling to preserve every penny in the budget, the treasury will be depleted shortly. Upcoming decisions will determine our future and fortunes. Now is the time for the most consequential debate since the Permanent Fund’s creation.

This matter requires Alaskans’ utmost attention. The silent majority in Alaska must wake up and engage. To avoid trouble, we had better.

In June 2014, oil prices began a precipitous drop from over $100 down to $50 per barrel. In a mere eight months our most significant economic driver lost half its value. Layoffs, deficit spending, recession, and population decline followed.

Perhaps the most substantial event was the diversion of a portion of the PFD away from the people, an action that has affected every Alaskan. Despite obvious warnings, these events caught Alaskans by surprise. Rather than responding to this prudently, Alaska chose abdication and ambivalence. Six years later we are still paralyzed by division and misinformation.

The prevailing arguments have been prosecuted by insatiable special interests and myopic political idealists. Most legislators appear to be surprised that the pragmatic minds of Alaskans are reluctant to embrace their views. These legislators fail to grasp they have not offered an efficacious solution.

Those few who are beholden to government spending contend that their interests are indispensable. Clearly if government spends just one more dollar, all our ills will be cured. Those who simply see cutting government as the counterpoint have failed to develop persuasive arguments and underestimate the considerable political influence of their antagonists.

Unleashing our sovereign wealth would certainly solve our short-term problems. As of December 31, 2019, the Alaska Permanent Fund value was $66.9 billion. That’s a lot of money, but if history tells us anything, the legislature has missed few opportunities to squander staggering sums. Only a rube would suggest that it would be wise to allow politicians to be the sole guardian of our treasure.

Promises of salvation through new revenues are equally impotent. While we do not know the details of the final budget, we are indisposed to believe that the deficit will be less than $1.5 billion. Placing a high tax burden on the backs of 730,000 Alaskans is unrealistic. By simple division, a tax burden of $2,050 per person is untenable. Fellow Alaskans, do you believe that the average working family of four earning $75,000 per year can relinquish $8,200 to government? Few families can spare $685 per month.

Cutting the budget would no doubt solve the fiscal crisis. Oil prices ascended during 2005, and spending exploded in staggering fashion. Despite claims of draconian cuts, the fact remains that Alaska has spent $14 billion in recent years. Alaskans elected a majority of legislators who ran on budget restraint, but some softened. The firm conservatives are outnumbered. Sadly, it is doubtful that significant reductions are likely.

So, what is needed now to change the trajectory of our state? It’s something few are discussing. A big part of the answer to our woes – declines in state revenue, job losses, shrinking population, and the impoverishment of our citizens – is increased oil production.

Unless we turn the tide of production decline, Alaska will no longer exist as we know it. Yes, that’s a blunt statement. It is however, a very true one. Declining oil production is the existential threat we are ignoring.

The silent majority cannot afford to ignore this threat. If Alaskans don’t speak up, households will be heavily burdened with taxes and an ever-dwindling PFD.

A statewide focused discussion about a responsible spending cap and more oil in the pipeline is critical. This is the first installment in a series of fierce polemics to address the latter: how increased TAPS production will help vanquish our dilemma.

Replanting old ground with untenable crops (high taxes and PFD cuts) is a field destined for a paltry harvest (a weak and damaged economy). Increasing the volume of oil is the necessary path forward. Wake up and engage if you care about Alaska – and your wallet.

Senator Shelley Hughes is a 44-year Alaskan. She served in the Alaska House of Representatives from 2012-2016, and currently serves in the Alaska State Senate.

Steven Cinelli is a 25-year Alaskan. He has worked in consulting engineering, spent ten years in the telecom industry, and retired from the oil industry in 2016.

The post Op-Ed “Turn Up the Volume”-part 1 appeared first on Alaska Politics and Elections.

Time to let go and get it right

Sourced — Wed, 04 Dec 2019 21:36:27 +0000

by Senator Shelley Hughes

The sound of the crowd is at fever pitch. The intensity is explosive. Reduce the budget versus find new revenues is the fierce tug-of-war battle underway in Alaska.

On the “New Revenue” end, rope fibers fray as two players struggle for the lead while audience members break into factions, some fans of “Raise-Oil-Taxes”, others cheering “Raid-the-PFD”, and some ecstatic because of the potential windfall for government if both win.

Simultaneously, a bass sound rumbles as a wave in the stands rises and chants boos in unison. The “Hands-off-Our PFDs” crowd boisterously bellows against the “Raid the PFD” challenger. Another thunderous wave picks up from the “Bad-Unfair-Tax” crowd, railing against the “Raise-Oil Taxes” contestant.

Meanwhile, on the “Reduce the Budget” end of Alaska’s tug-of-war rope, a tall player with scissors in his pocket checks the tension on the rope as teammates, also carrying scissors, rotate to give a good, strong tug.

The uproar on this end isn’t so confusing. It’s just two groups. The “Wailing-and-Gnashing-of-Teeth” crowd sobs incessantly that life in Alaska as we know it will end if these guys win. The “Necessary-efficiencies-everyone-duh” crowd rolls their eyes at the wailers, followed by gleeful shouts when they notice their team’s scissors sparkle in the sunlight.

What a scene. Without an emerging victor in sight, could there ever be a more fractured crowd or more opposing forces? This tug-of-war has been underway for five years. That’s right: five years. Ever since oil prices dropped.

Here’s the good news. The tug-of-war has to end soon. Why (and this is the bad news)? Savings have dwindled. Incoming revenues don’t match spending. This is catapulting us to a crossroads; we have no choice but to act.

So must one team simply pull harder, cause painful rope-burns, and break the stalemate? That could happen but it’s unlikely – if the last five years mean anything.

At this crossroads, I believe it’s time to ask: Is there a better way? Is it possible for this to end well? The answer to both questions is yes.

It’s time to let go of the rope, everybody. Set it down.

What we need now is factual budget information to know whether and where we can reduce and whether and where state services are lacking. We don’t need political responses. We need apolitical, unbiased answers.

What Alaska needs now is a State Auditor who is independent and objective, neither beholden to the Legislature nor to the Governor, but is accountable to the people. State services are for the people and revenues are derived from the people. Who better to hold this position accountable?

We can bicker along majority/minority or party lines. We can fight over our most, or least favorite programs. We can pit one special interest group against another.

But wouldn’t it be better to get factual data, to get expert recommendations? With the effectiveness, efficiencies, statute requirements, constitutional obligations of each program factored into the equation? From someone who has no skin in the game, abides by approved standards and principles, has a team that can get into the weeds? Yes, this would be better.

This concept has worked on a small scale. Our legislative auditor annually reports on limited items, such as licensure boards. Her recommendations are well-accepted across the political spectrum. It works beautifully.

This is what we need now, budget-wide. Along with improved effectiveness and efficiencies, we can also root out fraud and abuse. How is this not a good thing?

The result: we will have a budget baseline which can be adjusted annually for inflation. This will give us assurance to address the spending cap that’s over-inflated and outdated in the state constitution; we’ll have confidence that the adjusted cap will be enough but not too much. We will sleep at night knowing we’re not going to sink the next generation.

Very importantly: this will allow us to know annually if we need new revenue or not. With our small population, it’s vital to know our budget baseline. We simply do not have enough people to carry an over-sized budget on our backs. Tax spigots rarely are turned off or down. A baseline that’s too high and increases that exceed inflation would be harmful for the economy and hard on Alaskans (undoubtedly spurring out-migration, leaving fewer backs to bear the burden).

I’ve spoken about this State Auditor concept with Alaskans since oil prices dropped. The reception has been warm and welcoming. I think the time is now. If you think so too, please inform your elected officials.

Senator Shelley Hughes
District F – Chugiak/Palmer

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